All FHA loans with a case number assigned on or after April 5, 2010 will see an increase of .5% in their UFMIP paid to the U.S. Department of Housing and Urban Development. The current UFMIP is at 1.75%.
However, the new UFMIP will be 2.25% of the loan amount and this will increase the monthly mortgage payment for just about all FHA home buyers. It also means that the FHA increases Up Front Mortgage Insurance Premiums (UFMIP) for all borrowers.
FHA sets minimum FICO scores and lowers seller constraints
All FHA loans with a case number assigned on or after April 5, 2010 will see an increase of .5% in their UFMIP paid to the U.S. Department of Housing and Urban Development. The current UFMIP is at 1.75%. The new UFMIP will be 2.25% of the loan amount. This increase will increase the monthly mortgage payment for just about all FHA home buyers.
Case numbers are generally assigned when there is a contract with a property address and a closing date, and when the borrower has committed to go forward with the loan.
FHA charges home buyers two types of fees that they call insurance
1) The UFMIP, as mentioned above, is a set one time fee that is generally added to the mortgage. On a typical $100,000 mortgage loan the fee is $1750 (after April 5th the fee will increase to $2,250) and is permitted to be financed by adding it to the borrower’s loan amount.
2) The annual premium, which is .55% of the loan amount paid on a monthly basis. Commonly referred to as monthly mortgage insurance premium; on a typical $100,000 loan it would cost the borrower an extra $45.83 per month.
These fees are used to offset FHA losses on loans that go into default and end up in foreclosure. The above examples are for the most common FHA loan, a 30yr fixed mortgage, and vary depending upon down payment and loan term.
For a copy of FHA’s announcement on this change please review mortgage letter 2010-02 .
FHA sets a minimum FICO score
FHA has set the minimum FICO score of 580 to qualify for FHAs 3.5% down payment program. Borrowers with less than a 580 FICO score will be required to put at least 10% down. Most lenders have set their requirements for new FHA loans at 620.
From the rumor mill:
FHA will change seller concessions (most commonly used when a seller pays the buyers closing costs) from 6% to 3%. This announcement is expected soon.
